On July 22, the Pakistan Petroleum Dealers Association (PPDA) made a significant declaration, announcing a nationwide shutdown of fuel pumps in demand for an increase in profit margins amid the ongoing inflation crisis. Representing over 10,000 members, the association stated that all petrol pumps in Pakistan would close at 6 pm on the said date. They claim to have previously expressed their concerns to the petroleum minister, but unfortunately, their pleas were disregarded.
The association’s statement shed light on the severe impact of high interest rates and inflation on the businesses of fuel operators, urging for an increase in the dealership margin. They also highlighted a 30% drop in sales due to the smuggling of Iranian fuel into the country.
Chairman Abdul Sami Khan, representing approximately 8,000-9,000 operators, stated that they would actively participate in the shutdown on July 22. The association emphasized that the supply of petrol will remain suspended until their demands are met.
Pakistan is currently grappling with a weakening currency and soaring inflation rates, reaching 29.4% in June, though it had slightly decreased from a record high of 38% in May.
In May, Pakistan’s oil industry had requested an increase of Rs12/liter margin on high-speed diesel (HSD) and petrol (Mogas) for oil marketing companies (OMCs) due to the high cost of doing business, leading to financial hardships.
As of the April 30, 2022 petroleum review, the OMCs’ margin on HSD was Rs6.50/liter, and Rs6/liter on Mogas. Dealers were charging Rs7/liter margin on both HSD and Mogas.
The oil industry has faced significant challenges since the previous year due to increased fuel prices in the international market, exchange rate fluctuations, higher interest rates resulting in inventory holding costs, credit letter confirmation charges leading to higher demurrages, and a high turnover tax (0.5 percent).